Question 1

Top management's reaction to a difference between budgeted and actual sales often depends on

Accepted Answer

A) whether the difference is favorable or unfavorable. 
B) whether management anticipated the difference. 
C) the materiality of the difference. 
D) the personality of the top managers. 
A) whether the difference is favorable or unfavorable. 
B) whether management anticipated the difference. 
C) the materiality of the difference. 
D) the personality of the top managers. C

Question 2

A measure frequently used to evaluate the performance of the manager of an investment center is

Accepted Answer

A) the amount of profit generated. 
B) the rate of return on funds invested in the center. 
C) the percentage increase in profit over the previous year. 
D) departmental gross profit. 
A) the amount of profit generated. 
B) the rate of return on funds invested in the center. 
C) the percentage increase in profit over the previous year. 
D) departmental gross profit. B

Question 3

The area manager of the Red, White, and Brew Restaurants is considering two possible expansion alternatives.The required investments, expected controllable margins, and the ROIs of each are as follows: $\begin{array}{lllr}\text { Project }&\text { Investment }&\text { Controllable Margin }&ROI\
\text { Phoenix } & \$ 120,000 & \$ 30,000 & 25 \% \
\text { Chicago } & \$ 540,000 & \$ 50,000 & 9.25 \%
\end{array}$ The Red, White, and Brew segment has currently $2,000,000 in invested capital and a controllable margin of $250,000.Which one of following projects will increase the Red, White, and Brew division's ROI?

Accepted Answer

A) Both the Phoenix and Chicago options 
B) Only the Phoenix option 
C) Only the Chicago option 
D) Neither the Phoenix nor the Chicago options 
A) Both the Phoenix and Chicago options 
B) Only the Phoenix option 
C) Only the Chicago option 
D) Neither the Phoenix nor the Chicago options B

Question 4

Top management can control

Accepted Answer

A) only controllable costs. 
B) only noncontrollable costs. 
C) all costs. 
D) some noncontrollable costs and all controllable costs. 
A) only controllable costs. 
B) only noncontrollable costs. 
C) all costs. 
D) some noncontrollable costs and all controllable costs.

Question 5

Performance reports for cost centers compare actual

Accepted Answer

A) total costs with static budget data. 
B) total costs with flexible budget data. 
C) controllable costs with static budget data. 
D) controllable costs with flexible budget data. 
A) total costs with static budget data. 
B) total costs with flexible budget data. 
C) controllable costs with static budget data. 
D) controllable costs with flexible budget data.

Question 6

Naples, Inc.recorded operating data for its shoe division for the year. $$\begin{array} { l r } 
\text { Sales } & \$ 750,000 \
\text { Contribution margin } & 135,000 \
\text { Total fixed costs } & 90,000 \
\text { Average total operating assets } & 300,000
\end{array}$$ How much is ROI for the year if management is able to identify a way to improve the contribution margin by $30,000, assuming fixed costs are held constant?

Accepted Answer

A) 25% 
B) 18% 
C) 45% 
D) 12% 
A) 25% 
B) 18% 
C) 45% 
D) 12%

Question 7

A static budget is appropriate for

Accepted Answer

A) variable overhead costs. 
B) direct materials costs. 
C) fixed overhead costs. 
D) None of these answers are correct. 
A) variable overhead costs. 
B) direct materials costs. 
C) fixed overhead costs. 
D) None of these answers are correct.

Question 8

What budgeted amounts appear on the flexible budget?

Accepted Answer

A) Original budgeted amounts at the static budget activity level 
B) Actual costs for the budgeted activity level 
C) Budgeted amounts for the actual activity level achieved 
D) Actual costs for the estimated activity level 
A) Original budgeted amounts at the static budget activity level 
B) Actual costs for the budgeted activity level 
C) Budgeted amounts for the actual activity level achieved 
D) Actual costs for the estimated activity level

Question 9

Which of the following would not be considered an aspect of budgetary control?

Accepted Answer

A) It assists in the determination of differences between actual and planned results. 
B) It provides feedback value needed by management to see whether actual operations are on course. 
C) It assists management in controlling operations. 
D) It provides a guarantee for favorable results. 
A) It assists in the determination of differences between actual and planned results. 
B) It provides feedback value needed by management to see whether actual operations are on course. 
C) It assists management in controlling operations. 
D) It provides a guarantee for favorable results.

Question 10

The maintenance department of a manufacturing company is a(n)

Accepted Answer

A) segment. 
B) profit center. 
C) cost center. 
D) investment center. 
A) segment. 
B) profit center. 
C) cost center. 
D) investment center.

Question 11

In the performance report for cost centers,

Accepted Answer

A) controllable and noncontrollable costs are reported. 
B) fixed costs are not reported. 
C) no distinction is made between fixed and variable costs. 
D) only materials and controllable costs are reported. 
A) controllable and noncontrollable costs are reported. 
B) fixed costs are not reported. 
C) no distinction is made between fixed and variable costs. 
D) only materials and controllable costs are reported.

Question 12

The linens department of a large department store is

Accepted Answer

A) not a responsibility center. 
B) a profit center. 
C) a cost center. 
D) an investment center. 
A) not a responsibility center. 
B) a profit center. 
C) a cost center. 
D) an investment center.

Question 13

The denominator in the formula for calculating the return on investment includes operating and nonoperating assets.

Accepted Answer

A) True 
 B)False

Question 14

The activity index used in preparing the flexible budget

Accepted Answer

A) is prescribed by generally accepted accounting principles. 
B) is only applicable to fixed manufacturing costs. 
C) is the same for all departments. 
D) should significantly influence the costs that are being budgeted. 
A) is prescribed by generally accepted accounting principles. 
B) is only applicable to fixed manufacturing costs. 
C) is the same for all departments. 
D) should significantly influence the costs that are being budgeted.

Question 15

In the Goblette Manufacturing Company, indirect labor is budgeted for $108,000 and factory supervision is budgeted for $36,000 at normal capacity of 160,000 direct labor hours.If 180,000 direct labor hours are worked, flexible budget total for these costs is:

Accepted Answer

A) $144,000. 
B) $162,000. 
C) $157,500. 
D) $148,500. 
A) $144,000. 
B) $162,000. 
C) $157,500. 
D) $148,500.

Question 16

At 18,000 direct labor hours, the flexible budget for indirect materials is $36,000.If $37,400 are incurred at 18,400 direct labor hours, the flexible budget report should show the following difference for indirect materials:

Accepted Answer

A) $1,400 unfavorable. 
B) $1,400 favorable. 
C) $600 favorable. 
D) $600 unfavorable. 
A) $1,400 unfavorable. 
B) $1,400 favorable. 
C) $600 favorable. 
D) $600 unfavorable.

Question 17

Residual income and ROI are used as performance evaluation methods for profit center performance

Accepted Answer

A) True 
 B)False

Question 18

Management by exception

Accepted Answer

A) is most effective at top levels of management. 
B) can be implemented at each level of responsibility within an organization. 
C) can only be applied when comparing actual results with the master budget. 
D) is the opposite of goal congruence. 
A) is most effective at top levels of management. 
B) can be implemented at each level of responsibility within an organization. 
C) can only be applied when comparing actual results with the master budget. 
D) is the opposite of goal congruence.

Question 19

What is budgetary control?

Accepted Answer

A) Another name for a flexible budget 
B) The degree to which the CFO controls the budget 
C) The use of budgets in controlling operations 
D) The process of providing information on budget differences to lower level managers 
A) Another name for a flexible budget 
B) The degree to which the CFO controls the budget 
C) The use of budgets in controlling operations 
D) The process of providing information on budget differences to lower level managers

Question 20

Grown Industries reported the following items for 2016: $\begin{array}{lr}
\text { Income tax expense } & \$ 60,000 \
\text { Contribution margin } & 200,000 \
\text { Controllable fixed costs } & 80,000 \
\text { Interest expense } & 40,000 \
\text { Total operating assets } & 650,000
\end{array}$ How much is controllable margin?

Accepted Answer

A) $200,000 
B) $120,000 
C) $60,000 
D) $20,000 
A) $200,000 
B) $120,000 
C) $60,000 
D) $20,000

Top management's reaction to a difference between budgeted and actual sales often depends on

A measure frequently used to evaluate the performance of the manager of an investment center is

Top management can control

Performance reports for cost centers compare actual

A static budget is appropriate for

What budgeted amounts appear on the flexible budget?

Which of the following would not be considered an aspect of budgetary control?

The maintenance department of a manufacturing company is a(n)

In the performance report for cost centers,

The linens department of a large department store is

The denominator in the formula for calculating the return on investment includes operating and nonoperating assets.

The activity index used in preparing the flexible budget

In the Goblette Manufacturing Company, indirect labor is budgeted for $108,000 and factory supervision is budgeted for $36,000 at normal capacity of 160,000 direct labor hours.If 180,000 direct labor hours are worked, flexible budget total for these costs is:

At 18,000 direct labor hours, the flexible budget for indirect materials is $36,000.If $37,400 are incurred at 18,400 direct labor hours, the flexible budget report should show the following difference for indirect materials:

Residual income and ROI are used as performance evaluation methods for profit center performance

Management by exception

What is budgetary control?

Grown Industries reported the following items for 2016: Income tax expense \ 60,000 Contribution margin 200,000 Controllable fixed costs 80,000 Interest expense 40,000 Total operating assets 650,000 How much is controllable margin?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Time Value of Money

Filters

Exam 10: Reporting and Analyzing Liabilities

Top management's reaction to a difference between budgeted and actual sales often depends on

A measure frequently used to evaluate the performance of the manager of an investment center is

Top management can control

Performance reports for cost centers compare actual

A static budget is appropriate for

What budgeted amounts appear on the flexible budget?

Which of the following would not be considered an aspect of budgetary control?

The maintenance department of a manufacturing company is a(n)

In the performance report for cost centers,

The linens department of a large department store is

The denominator in the formula for calculating the return on investment includes operating and nonoperating assets.

The activity index used in preparing the flexible budget

In the Goblette Manufacturing Company, indirect labor is budgeted for $108,000 and factory supervision is budgeted for $36,000 at normal capacity of 160,000 direct labor hours.If 180,000 direct labor hours are worked, flexible budget total for these costs is:

At 18,000 direct labor hours, the flexible budget for indirect materials is $36,000.If $37,400 are incurred at 18,400 direct labor hours, the flexible budget report should show the following difference for indirect materials:

Residual income and ROI are used as performance evaluation methods for profit center performance

Management by exception

What is budgetary control?

Grown Industries reported the following items for 2016: Income tax expense \ 60,000 Contribution margin 200,000 Controllable fixed costs 80,000 Interest expense 40,000 Total operating assets 650,000 How much is controllable margin?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Time Value of Money

Filters